Morgan Stanley: HDD Shortage Extended to 2028, Prices Could Double Within Two to Three Years
Taylor Wilson
Morgan Stanley warns that the global hard-disk-drive shortage will stretch to at least 2028, with today's roughly $15-per-TB pricing potentially doubling in two to three years — driven by a twin pull from AI inference and core cloud demand.
HDDs are old tech — why is AI making them scarcer?
A three-week Morgan Stanley supply-chain survey across Asia found demand surging on two fronts: cloud infrastructure running ahead of expectations, and AI inference plus agent workloads pulling hard on bulk storage.
This means → HDDs lack the glamour of SSDs or HBM (high-bandwidth memory), but their high capacity at low cost makes them the go-to medium for the massive datasets needed to train large language models.
In plain terms = training an AI model takes enormous data. SSDs are too expensive at scale; HDDs are the only "warehouse" big and cheap enough to hold it all.
What's driving prices up, and by how much?
Taiwanese manufacturers flagged three forces behind pricing power: higher-capacity products launching, NAND flash prices spiking, and persistently strong demand.
Morgan Stanley expects today's roughly $15 per TB to potentially double within two to three years.
This means → unlike the sharp swings seen in memory, HDD makers will raise prices in a "more controlled, more predictable" way — a slow grind upward, but directionally certain.
Why can't a new entrant break the oligopoly?
Western Digital CEO Irving Tan outlined three barriers to Morgan Stanley: certification timelines are extreme (HAMR — heat-assisted magnetic recording — alone took over a decade), cross-disciplinary integration is daunting (spanning magnetics, materials science, photonics, and nanofabrication), and the supply chain is highly concentrated with near-full utilization — leaving almost no spare capacity for newcomers.
This reflects a locked-in oligopoly. Morgan Stanley sees virtually no variable that can reshape the supply side unless cloud capex reverses entirely.
In plain terms = to build hard drives, you need a decade to clear the tech hurdle — and there are no idle production lines to rent. New players simply cannot get in.
Who ends up paying?
Hyperscalers like AWS and Azure have bargaining power, but non-hyperscale enterprise buyers will bear higher storage costs for longer.
If HDD prices keep climbing while software demand grows in tandem, the pace of hardware upgrades in consumer devices may slow.
Morgan Stanley calls this trend "shitflation" — This means → consumers pay the same money but get lower specs, a compounding of shrinkflation and quality degradation.
Content is for reference only, not financial advice.